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Investing in Wine: Returning 522%, Some Wines Are Outpacing Stocks

By Dr. Steve Sjuggerud, President, Investment U
Thursday, February 12, 2004: Issue #312

“Let’s face it, in a worst-case scenario, you can literally drink your investment into oblivion” – Eric Roseman

If you’ve never given thought to investing in wine, just look at a recent issue of Global Mutual Fund Investor. My friend Eric Roseman points out that First Growth Bordeaux wine (1990 vintage) has risen by 522% over the last 10 years, beating out stocks. Up 522% in the last 10 years!

Roseman says, “Some of the world’s finer vintages have severely outpaced the S&P 500 Index – especially from 2000 to 2002 when the American broader market crashed 40%. Wine truly has no correlation whatsoever to the S&P 500 Index and offers key asset allocation diversification as an investment

According to Forbes.com: “The world’s most expensive bottle of wine that could actually be drunk today is also the most expensive wine ever sold in America, a Montrachet 1978 from Domaine de la Romanée-Conti that was hammered down at Sotheby’s in New York in 2001. The lot of seven bottles fetched $167,500, or $23,929 per bottle.”

The NYSE of the Wine Investing World

The wine investing market is actually developing into a “pseudo stock exchange” for finer vintages, Roseman says. For example, “The WorldWineXchange.com offers secure trading in fine wine to international buyers and sellers on a real-time, first-come, first-served basis.”

Whether it’s a joke or it’s serious, there’s actually a wine price “ticker” running across the bottom of the web page.

The wine investors themselves don’t see wine investing as a joke at all They see a supply of fine wines from good years constantly shrinking pushing prices ever higher. It’s Economics 101, they say – supply is falling while demand is increasing.

If you’re into wines, you may get a kick out of a few web sites that are out there:

Although I’m no wine expert, I found these sites interesting.

Robert Parker’s newsletter is popular, as well, as a high rating from him will almost guarantee high demand for a wine. But I’m getting out of my area of expertise here.

Honestly, I know nothing about wine – I’m not joking. But I got a kick out of my friend’s article about wine as an investing strategy. In particular, I liked Eric’s view about the upside of the downside

“Let’s face it, in a worst-case scenario, you can literally drink your investment into oblivion!”

Good investing (or, if it doesn’t work out, drowning your sorrows),

Steve

Today’s Investment U Cribsheet

  • I mention world-renowned wine critic Robert Parker above. You can read more about this fascinating guy by visiting www.erobertparker.com. You’ll find a great deal of information about the drinkable investment.
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